Merck & Co., Inc. - s21.q4cdn.com

1 As filed with the Securities and Exchange Commission on February 27, 2019 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D. C. 20549_____FORM 10-K(MARK ONE) Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended December 31, 2018or Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File No. 1-6571_____Merck & Co., Galloping Hill RoadKenilworth, N. J. 07033(908) 740-4000 Incorporated in New EmployerIdentification No. 22-1918501 Securities Registered pursuant to Section 12(b) of the Act:Title of Each ClassName of Each Exchange on which RegisteredCommon Stock ($ par value)New York Stock Notes due 2021 New York Stock Notes due 2024 New York Stock Notes due 2026 New York Stock Notes due 2034 New York Stock Notes due 2036 New York Stock ExchangeNumber of shares of Common Stock ($ par value) outstanding as of January 31, 2019: 2,581,220, market value of Common Stock ($ par value) held by non-affiliates on June 30, 2018 based on closing price on June 30,2018: $161,991,000, by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

2 Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities ExchangeAct of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subjectto such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuantto Rule 405 of Regulation S-T ( of this chapter) during the preceding 12 months (or for such shorter period that the registrant was requiredto submit such files). Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K ( ) is not contained herein, andwill not be contained, to the best of registrant s knowledge, in definitive proxy or information statements incorporated by reference in Part III ofthis Form 10-K or any amendment to this Form 10-K.

3 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reportingcompany, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act. (Check One):Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complyingwith any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No Documents Incorporated by Reference.

4 DocumentPart of Form 10-KProxy Statement for the Annual Meeting of Shareholders to be held May 28, 2019, to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year covered by this reportPart IIIT able of ContentsPagePart IItem Factors20 Cautionary Factors that May Affect Future Results30 Item Staff Comments31 Item Proceedings31 Item Safety Disclosures31 Executive Officers of the Registrant32 Part IIItem for Registrant s Common Equity, Related Stockholder Matters and Issuer Purchases ofEquity Securities33 Item Financial Data35 Item s Discussion and Analysis of Financial Condition and Results of Operations36 Item and Qualitative Disclosures About Market Risk67 Item Statements and Supplementary Data68(a)Financial Statements68 Notes to Consolidated Financial Statements72 Report of Independent Registered Public Accounting Firm127(b)Supplementary Data129 Item in and Disagreements with Accountants on Accounting and Financial Disclosure130 Item and Procedures130 Management s Report130 Item Information131 Part IIIItem , Executive Officers and Corporate Governance132 Item Compensation132 Item Ownership of Certain Beneficial Owners and Management and RelatedStockholder Matters133 Item Relationships and Related Transactions, and Director Independence133 Item Accountant Fees and Services133 Part IVItem and Financial Statement Schedules134 Item 10-K Summary137 Signatures138 Table of ContentsPART I Table of Contents1 Item & Co.

5 , Inc. ( Merck or the Company) is a global health care company that delivers innovative healthsolutions through its prescription medicines, vaccines, biologic therapies and animal health products. The Company soperations are principally managed on a products basis and include four operating segments, which are thePharmaceutical, Animal Health, Healthcare Services and Alliances segments. The Pharmaceutical segment includes human health pharmaceutical and vaccine products. Human healthpharmaceutical products consist of therapeutic and preventive agents, generally sold by prescription, for the treatmentof human disorders. The Company sells these human health pharmaceutical products primarily to drug wholesalersand retailers, hospitals, government agencies and managed health care providers such as health maintenanceorganizations, pharmacy benefit managers and other institutions.

6 Human health vaccine products consist of preventivepediatric, adolescent and adult vaccines, primarily administered at physician offices. The Company sells these humanhealth vaccines primarily to physicians, wholesalers, physician distributors and government Animal Health segment discovers, develops, manufactures and markets animal health products,including pharmaceutical and vaccine products, for the prevention, treatment and control of disease in all major livestockand companion animal species, which the Company sells to veterinarians, distributors and animal producers. The Healthcare Services segment provides services and solutions that focus on engagement, health analyticsand clinical services to improve the value of care delivered to patients. The Alliances segment primarily includes results from the Company s relationship with AstraZeneca LPrelated to sales of Nexium and Prilosec, which concluded in 2018.

7 The Company was incorporated in New Jersey in product or service marks appearing in type form different from that of the surrounding text are trademarksor service marks owned, licensed to, promoted or distributed by Merck , its subsidiaries or affiliates, except as other trademarks or services marks are those of their respective SalesTotal Company sales, including sales of the Company s top pharmaceutical products, as well as sales ofanimal health products, were as follows:($ in millions)201820172016 Total Sales$42,294$40,122$39,807 Pharmaceutical37,68935,39035,151 Keytruda7,1713,8091,402 Januvia/Janumet5,9145,8966,109 Gardasil/Gardasil 93,1512,3082,173 ProQuad/M-M-R II/Varivax1,7981,6761,640 Zetia/Vytorin1,3552,0953,701 Isentress/Isentress HD1,1401,2041,387 Bridion917704482 Pneumovax 23907821641 NuvaRing902761777 Simponi893819766 Animal Health4,2123,8753,478 Livestock2,6302,4842,287 Companion Animals1,5821,3911,191 Other Revenues(1)3938571,178(1)Other revenues are primarily comprised of Healthcare Services segment revenue, third-party manufacturing sales, and miscellaneous corporaterevenues, including revenue hedging Pharmaceutical segment includes human health pharmaceutical and vaccine products.

8 Human healthpharmaceutical products consist of therapeutic and preventive agents, generally sold by prescription, for the treatmentof human disorders. Human health vaccine products consist of preventive pediatric, adolescent and adult vaccines,primarily administered at physician offices. Certain of the products within the Company s franchises are as follows:OncologyKeytruda (pembrolizumab), the Company s anti-PD-1 (programmed death receptor-1) therapy, asmonotherapy for the treatment of certain patients with non-small-cell lung cancer (NSCLC), melanoma, classicalHodgkin Lymphoma (cHL), urothelial carcinoma, head and neck squamous cell carcinoma (HNSCC), gastric orgastroesophageal junction adenocarcinoma, and microsatellite instability-high (MSI-H) or mismatch repair deficientcancer, and in combination with chemotherapy in certain patients with NSCLC.

9 Keytruda is also used in the UnitedStates for monotherapy treatment of certain patients with cervical cancer, primary mediastinal large B-cell lymphoma(PMBCL), hepatocellular carcinoma, and Merkel cell carcinoma, and in combination with chemotherapy for patientswith squamous NSCLC; Emend (aprepitant) for the prevention of chemotherapy-induced and post-operative nauseaand vomiting; and Temodar (temozolomide) (marketed as Temodal outside the United States), a treatment for certaintypes of brain tumors. In addition, the Company recognizes alliance revenue related to sales of Lynparza (olaparib),an oral poly (ADP-ribose) polymerase (PARP) inhibitor, for certain types of ovarian and breast cancer; and Lenvima(lenvatinib) for certain types of thyroid cancer, hepatocellular carcinoma, and in combination for certain patients withrenal cell carcinoma. VaccinesGardasil (Human Papillomavirus Quadrivalent [Types 6, 11, 16 and 18] vaccine , Recombinant)/Gardasil 9(Human Papillomavirus 9-valent vaccine , Recombinant), vaccines to help prevent certain diseases caused by certaintypes of human papillomavirus (HPV); ProQuad (Measles, Mumps, Rubella and Varicella Virus vaccine Live), apediatric combination vaccine to help protect against measles, mumps, rubella and varicella; M-M-R II (Measles, Mumpsand Rubella Virus vaccine Live), a vaccine to help prevent measles, mumps and rubella; Varivax (Varicella VirusVaccine Live), a vaccine to help prevent chickenpox (varicella); Pneumovax 23 (pneumococcal vaccine polyvalent), avaccine to help prevent pneumococcal disease.

10 RotaTeq (Rotavirus vaccine , Live Oral, Pentavalent), a vaccine to helpprotect against rotavirus gastroenteritis in infants and children; and Zostavax (Zoster vaccine Live), a vaccine to helpprevent shingles (herpes zoster).Hospital Acute CareBridion (sugammadex) Injection, a medication for the reversal of two types of neuromuscular blockingagents used during surgery; Noxafil (posaconazole) for the prevention of invasive fungal infections; Invanz (ertapenemsodium) for the treatment of certain infections; Cubicin (daptomycin for injection), an antibiotic for complicatedskin and skin structure infections or bacteremia, when caused by designated susceptible organisms; Cancidas(caspofungin acetate), an anti-fungal product; Primaxin (imipenem and cilastatin sodium), an anti-bacterial product;and Zerbaxa (ceftolozane and tazobactam) is currently approved in the United States for the treatment of adult patientswith complicated urinary tract infections caused by certain susceptible Gram-negative microorganisms, and is alsoindicated, in combination with metronidazole, for the treatment of adult patients with complicated intra-abdominalinfections caused by certain susceptible Gram-negative and Gram-positive (golimumab), a once-monthly subcutaneous treatment for certain inflammatory diseases.